Facebook is once again doing battle with regulations, and this time, the fight is with the UK. Against Facebook in this round is the Competition and Markets Authority (CMA), ruling that Facebook must sell GIPHY, the leading GIF platform which Facebook had acquired in May 2020, due to GIPHY’s alleged potential to reduce competition between social platforms and certain advertising markets.

As the CMA has outlined:

“The independent CMA panel reviewing the merger has concluded that Facebook would be able to increase its already significant market power in relation to other social media platforms by denying or limiting other platforms’ access to Giphy GIFs, driving more traffic to Facebook-owned sites, or changing the terms of access by, for example, requiring TikTok, Twitter and Snapchat to provide more user data in order to access Giphy GIFs.”

‘Monopolized Competition’

The CMA has identified a series of concerning elements regarding Facebook’s acquisition of GIPHY, with increased data access being among the primary ones. Further investigation has revealed that GIPHY’s own set of ad tools potentially rivaled even that of Facebook’s display ad services, prompting it to shutdown GIPHY’s ad projects the moment the acquisition was successful. Well, talk about ego-tripping.

With this in mind, the CMA deems that the arising competition concerns “can only be addressed by Facebook selling Giphy in its entirety to an approved buyer”. Meta, in defense of its starchild, will likely appeal the verdict, a move which it made obvious in responding to CMA findings.

Quoting Facebook:

“We disagree with this decision. We are reviewing the decision and considering all options, including appeal. Both consumers and Giphy are better off with the support of our infrastructure, talent, and resources. Together, Meta and Giphy would enhance Giphy’s product for the millions of people, businesses, developers and API partners in the UK and around the world who use Giphy every day, providing more choices for everyone.”

At best, Meta will be able to keep GIPHY, at least for the time being, with the potential to reverse the decision still present. However, should the decision stand final, then said ruling could mean yet another major shift in approach to regulatory approval of similar acquisitions – acquisitions that have allowed tech giants to dominate their respective markets simply through tactical if not unanimous purchasing. Meta, which was Facebook at the time, had faced similar backlash before, with both acquisitions of WhatsApp and Instagram respectively put in the hot-seat for questioning.

Meta had somewhat resorted to its strategy of buying out still-developing competitors to help it along its quest for total social media dominance. Through a data tracking program disguised as a VPN, Facebook could detect which apps were rising in usage among teens and younger audiences. When it was eventually found out, the program, Onavo, was shut down in 2019 due to various legal concerns revolving around its use and function.

Of the many that had fallen prey to Facebook’s aggressive buy-outs, Snapchat was able to fend-off the hungry platform and now enjoys an industry-leading role, despite its vast resource gap with Facebook.

The Wrap

The acquisition of GIPHY seems to fall on the lower end of the spectrum, at least with regards to the above-mentioned information. Still, it stands to serve as an important stance that could help decide future ruling and regulation in terms of tech space facilitation. The difficulty lies, however, in identifying exactly what elements should be addressed, seeing as how impacts vary from case-to-case and from region-to-region.

For example, In Australia, the government introduced new legislation that effectively forces social media platforms to identify trolls, upon legal request. Of course this ‘intervention’ still has questions regarding its implementation and methodology, but again, the ‘effectiveness’ of such regulatory action is difficult to directly ascertain. It would seem that the only place where such pushes would have more sway is if they’re enacted within the US, where most of the major social platforms are based, remaining outside the jurisdiction of region-specific legislations.

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Sources

https://bit.ly/3lpd16S